Wheat futures started the day lower, with the May 25 Chicago Board of Trade (CBOT) contract trading at $5.56 ¾ per bushel, down 5 ¾ cents from Tuesday’s close. Pressure in the wheat market follows the latest USDA report, which raised U.S. ending stocks to 819 million bushels due to increased imports and weakened exports. On a global scale, wheat inventories rose as higher production estimates in Australia and Turkey offset declining Chinese stocks.

Corn also opened in the red, with the May 25 contract at $4.70 ¼ per bushel, down 1 ¾ cents early Wednesday. The USDA’s balance sheet showed no adjustments to U.S. corn carryout, which remains at 1.54 billion bushels, contrary to expectations of a reduction. Despite lower carryover stocks from last year, global production increased by 1.7 million metric tons, with Brazil’s 2023/24 crop revised downward by 3 million tons.

Meanwhile, soybean futures began the session weaker, with the May 25 contract trading at $10.11 ¼ per bushel, down 2 ¾ cents. The USDA kept U.S. soybean supply estimates unchanged, but global stocks declined by nearly 3 million tons, mainly due to higher Chinese crushing demand and lower availability in Argentina.

A major development impacting global wheat trade is the latest attack on Ukraine’s port infrastructure. A Russian missile strike on Odesa killed four Syrian sailors on a vessel loading wheat for Algeria and injured two others. The attack damaged nearby ships and grain storage facilities, heightening concerns about the security of Ukraine’s grain exports. This incident comes as ceasefire negotiations between Russia and Ukraine, brokered in Saudi Arabia, remain in limbo. The situation has reinforced uncertainty in global wheat markets, as Ukraine is a crucial supplier.

Argentina is also facing disruptions, as oilseed workers have launched an indefinite strike at processing plants in response to wage disputes with agribusiness giant Vicentin. Union representatives stated that workers were only paid a fraction of last month’s wages, prompting a nationwide work stoppage. Argentina is a key exporter of soybean meal and oil, and prolonged disruptions could tighten global supply chains. While Brazil is expected to offset some of this uncertainty, the strike adds another layer of risk to the soybean market.

Brazil’s soybean exports, meanwhile, continue to surge. The country is expected to ship 15.45 million metric tons of soybeans in March, marking a more than 4% increase from previous forecasts. If realized, this would set a record for March shipments. The expansion of Brazil’s exports strengthens its position as the world’s largest soybean supplier, directly competing with U.S. exports. Despite Brazil’s dominance, logistical challenges and fluctuating demand from China could impact future shipments.

Russia’s role in global wheat exports also remains a point of focus. The Russian Agriculture Ministry announced an additional 26,660 tons of wheat export quota allocations among nine companies, adding to the existing 10.6 million tons designated for the February-to-June period. This move follows concerns that geopolitical uncertainties could restrict Russian wheat exports, which have been a stabilizing force in global supply.

Weather patterns are also influencing grain markets. Unseasonably warm temperatures across the U.S. Midwest and Central Plains could impact soil moisture conditions ahead of the spring planting season. While warm weather may accelerate early fieldwork, prolonged dryness could create challenges for crop development. South America is experiencing mixed weather effects, with Argentina remaining warm and dry, mostly favoring crop conditions. In Brazil, coastal rains are offering some relief, though persistent heat raises concerns about potential stress on developing crops. Paraguay, in contrast, is benefiting from mild conditions that support strong corn and soybean yields.

Trade policy remains a wildcard in grain markets. Canada has hinted at retaliatory tariffs on U.S. ethanol, a move that could impact corn demand. Ethanol is a significant driver of U.S. corn consumption, and any trade disruptions could weigh on prices. Additionally, the latest ethanol production estimates suggest a slight decline in U.S. output, with weekly production projected at 1.081 million barrels per day, down from the previous week. Ethanol stockpiles are also expected to shrink slightly, indicating steady demand despite weaker production.

Market participants were closely watching the USDA’s latest supply and demand report, which ultimately kept U.S. corn and soybean carryout projections unchanged. This lack of adjustment contributed to early losses in futures prices, as traders had anticipated revisions. Wheat stocks, however, were revised higher, adding pressure to U.S. wheat futures. European wheat production estimates have also been lowered, with Coceral cutting its forecast for EU wheat output in 2025 to 137.2 million metric tons, down from 140.4 million in December. Declining European production could tighten global wheat availability, though increased output in Australia and Turkey is expected to cushion some of the impact.

China’s role in global grain markets remains significant, particularly in the soybean sector. The USDA raised its estimate for Chinese soybean crush by 2 million metric tons, leading to a decline in China’s projected soybean stocks to 43.96 million metric tons. Strong Chinese demand continues to underpin global soybean trade, even as economic uncertainties loom.

As global grain markets navigate these developments, volatility remains a key theme. The combination of geopolitical instability, labor disruptions, shifting production forecasts, and weather uncertainties creates a complex trading environment. While Brazil’s record soybean exports offer some supply relief, ongoing challenges in Ukraine, Argentina, and Russia introduce new risks. Traders will be closely monitoring developments in trade policy, energy markets, and crop conditions in the weeks ahead to gauge the direction of global grain markets.